How many times have we all fallen under the temptation to apply for a credit card in exchange for some special offer or discount? Sometimes it is in the mail, sometimes at the department stores, other times at events, but where ever it occurs, it is at an all time high with the ferocious competition out there between credit card companies. The problem is that this becomes very detrimental to your credit scores.
Don't open accounts thinking it will raise your credit scores, as it may not help at all. Have a minimal number of cards and only the ones you need, and use them wisely. The scoring algorithm looks at credit card debt in a variety of
different ways. believe it or not, the scoring system seems to favor someone with a few active credit card accounts (among other types of credit) over the consumer with no credit card accounts. You are showing the ability to manage debt and monthly obligations.
There does need to be a good mix of installment, credit card and mortgage obligations and payments histories for your scores to climb. Again, manage a few, don't open any new accounts un-necessarily and of course, pay them all on time. We will touch on the percentages of one type of credit over another in a later post.
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